Toronto-based Granite REIT (GRT-UN-T) is acquiring three large U.S. industrial properties comprising 3.5 million square feet and has named a head of U.S. industrial operations to work out of a new company office in Dallas.
The combined purchase price for the three properties in Indiana, Georgia and Texas will be $393 million (all figures in Canadian dollars). By far the largest of the three purchases is a new, multi-level facility in Dallas which comprises about 2.3 million square feet.
Granite says the properties are fully leased with an average weighted term of 14.8 years and the going-in weighted average yield is approximately 5.6 per cent.
Granite also hired 19-year industry veteran Jon Sorg to head its U.S. team. Sorg’s experience is in investment, asset management and valuation experience in a variety of markets across the south and central U.S.
“These acquisitions further advance our strategy of acquiring and developing modern e-commerce fulfillment and distribution facilities in Granite’s target markets in the U.S.,” said president and CEO Kevan Gorrie in a release.
“We expect these acquisitions to further enhance the quality of our portfolio, deliver stable and growing cash flow and generate net asset value growth for our unitholders.”
In addition, the trust extended and refinanced its $246-million term loan to December 2024 and entered into a new cross-currency interest rate swap. This will result in in Euro-denominated payments at a 5.22 per cent fixed interest rate, about 70 basis points lower than the previous rate.
The refinancing is expected to result in interest savings of approximately $1.6 million annually.
“As evidenced by the recent refinancing outlined herein, we continue to leverage our unique access to lower cost Euro-denominated debt to enhance our returns and cash flow,” Gorrie said in the release.
1301 Chalk Hill Rd. is a state-of-the-art 2.3-million-square-foot, multi-level ecommerce fulfillment centre on 101 acres of land. The newly constructed property is 100 per cent leased to global e-commerce provider Amazon for 20 years.
Key physical attributes include 41-foot clear height, white TPO roof, air conditioning throughout, interior and exterior LED lighting, 2,500 auto parking spaces, 300 trailer spaces and a site coverage ratio of 19.3 per cent.
The site is within Dallas’ Pinnacle/Turnpike submarket, approximately 11 kilometres west of downtown Dallas. It benefits from access to Interstate 30 and Dallas’ extensive air and road logistics systems, as well as a population base and labour force ideal for last-mile and regional service.
This pending acquisition had been previously announced, but had been contingent on the tenant waiving its right to purchase the facility. That has now occurred and the acquisition is expected to close during Q4 2019.
Granite acquired 831 North Graham Rd., a new 496,416-square-foot distribution centre with 36-foot clear heights, earlier this month. It is situated on 31.4 acres of land in the Indianapolis market area.
The state-of-the-art facility was completed in 2018 and is 100 per cent leased to Spreetail, a private e-commerce provider of home and garden consumer goods, for seven more years.
Greenwood is 24 km from the FedEx Air Hub and the Indianapolis International Airport. It also offers access to the I-65, which connects to Louisville and the UPS Worldport Air Hub.
Granite acquired 100 Clyde Alexander Lane, a 689,400-square-foot, 32-foot clear height distribution centre, on Oct. 18. It is on 48.3 acres of land in the Savannah area, adjacent to Granite’s existing property at 101 Clyde Alexander Lane.
It is 100 per cent leased to Best Choice Products, an e-commerce provider with a focus on home furnishings, toys and appliances, with just over three years remaining.
The property is situated close to major distribution modes, including the Port of Savannah, the Savannah-Hilton International Airport, the CSX Intermodal Yard and the I-95 and I-16 highways.
The two acquisitions that have been completed were financed using cash on hand. The Dallas acquisition will also be financed with cash on hand.
Granite is a Canadian-based REIT engaged in the acquisition, development, ownership and management of industrial, warehouse and logistics properties in North America and Europe.
Granite owns over 80 rental income properties representing approximately 38.5 million square feet of leasable area.